CACI

CACI International Inc. - 10-K Summary (Fiscal Year Ended June 30, 2003)

Business Context and Reporting Period

This Form 10-K covers the fiscal year ended June 30, 2003. CACI International Inc. is a holding company providing information technology (IT) and communications solutions to government and commercial clients, primarily in North America and the United Kingdom. The company operates through four service offerings: systems integration, managed network services, knowledge management, and engineering services. As of June 30, 2003, CACI employed approximately 6,300 people across over 85 locations.

Key Financial Metrics

Revenue Mix: 92.2% of revenue was derived from U.S. Government contracts (63.6% DoD, 11.2% DoJ, 17.4% other civilian). Commercial revenue accounted for 7.8%.

Material Changes vs. Prior Period

• Revenue Growth: Total revenue increased 23.6% ($161.2 million) driven by increased federal demand and acquisitions. DoD revenue grew 23.6% ($102.3 million), while Federal Civilian Agency revenue grew 31.0% ($57.1 million).
• Acquisitions: The company completed five significant acquisitions in FY2003 (Condor, Acton Burnell, ATS, PTG, and RISys), which contributed approximately $72.7 million to total revenue. These acquisitions were immediately accretive to operating income.
• Profitability: Operating income increased 32.6% to $70.4 million. Margins improved due to a favorable contract mix (more fixed-price and time-and-materials work) and the elimination of goodwill amortization following the adoption of SFAS No. 142.
• Liquidity: Cash and cash equivalents decreased from $131.0 million to $73.7 million, primarily due to $113.2 million used in investing activities for acquisitions and capital expenditures, offset by strong operating cash flow.
• Debt: The company paid off its $25 million line of credit balance in January 2003. As of June 30, 2003, there were no borrowings under its $185 million revolving credit facility.

Outlook, Risks, and Contingencies

• Guidance: The filing does not provide specific numerical guidance for the upcoming fiscal year. Management anticipates the majority of the funded backlog will be filled during the fiscal year ending June 30, 2004.
• Key Risks:
  • Government Dependence: 92.2% of revenue comes from federal contracts. Changes in budgetary priorities, funding delays, or contract terminations could materially harm operations.
  • Competition: The industry is highly competitive with larger firms. Pricing pressure is increasing due to the government's shift toward ID/IQ and GWAC contracts.
  • Fixed-Price Risk: Approximately 18.7% of revenue is from fixed-price contracts, exposing the company to cost overruns if estimates are inaccurate.
  • Personnel: Success depends on retaining skilled technical personnel and maintaining security clearances.
• Legal Proceedings:
  • ASBCA Appeal: An appeal regarding a breach of contract claim against the Defense Information Systems Agency (DISA) is scheduled for hearing in November 2003.
  • Delphinus Lawsuit: A jury returned verdicts totaling $565,000 against defendants in a suit regarding business diversion; post-trial motions are pending.
• Subsequent Event: On September 23, 2003, CACI signed an agreement to acquire C-CUBED Corporation, expected to close in October 2003.

Investor Verification Checklist

• Backlog Realization: Verify the conversion rate of the $2.5 billion backlog into revenue, noting that only $469 million is currently funded.
• Acquisition Integration: Monitor the integration of recent acquisitions (PTG, Acton Burnell, etc.) and the realization of projected synergies.
• Government Funding: Track U.S. federal budget approvals and continuing resolutions, as delays can impact revenue recognition.
• Contract Mix: Assess the shift between fixed-price and cost-reimbursable contracts to evaluate margin stability.
• Legal Outcomes: Review the final resolution of the ASBCA appeal and the Delphinus lawsuit post-trial motions.